Annual Report 2012-2013
Office of the Taxpayers’ Ombudsman
50 O’Connor Street, Suite 724
Ottawa, ON K1P 6L2
Tel: 613-946-2310 | Toll-free: 1-866-586-3839
Fax: 613-941-6319 | Toll-free fax: 1-866-586-3855
© Minister of Public Works and Government Services Canada 2013
Cat. No.: Rv6-2013E-PDF
ISSN: 1928-8700
This publication is also available in electronic format at www.oto-boc.gc.ca
TAXPAYER
BILL OF RIGHTS
1.
You have the right to receive entitlements and to pay no more and no
less than what is required by law.
2.
You have the right to service in both official languages.
3.
You have the right to privacy and confidentiality.
4. You have the right to a formal review and a subsequent appeal.
5.
You have the right to be treated professionally, courteously, and fairly. *
6.
You have the right to complete, accurate, clear, and timely information. *
7.
You have the right, as an individual, not to pay income tax amounts in
dispute before you have had an impartial review.
8. You have the right to have the law applied consistently.
9.
You have the right to lodge a service complaint and to be provided with
an explanation of [the Canada Revenue Agency’s] findings. *
10. You have the right to have the costs of compliance taken into account
when administering tax legislation. *
11. You have the right to expect [the Canada Revenue Agency] to be accountable. *
12. You have the right to relief from penalties and interest under tax legislation
because of extraordinary circumstances.
13. You have the right to expect [the Canada Revenue Agency] to publish
our service standards and report annually. *
14. You have the right to expect [the Canada Revenue Agency] to warn you
about questionable tax schemes in a timely manner. *
15. You have the right to be represented by a person of your choice. *
16. You have the right to lodge a service complaint and request a formal
review without fear of reprisal.
* Service rights upheld by the Taxpayers’ Ombudsman
i
Taxpayers’ Ombudsman
August 21, 2013
The Honourable Kerry-Lynne D. Findlay PC, QC, MP
Minister of National Revenue
555 MacKenzie Avenue, 7th floor
Ottawa, ON K1A 0L5
Dear Minister:
I am pleased to submit, for tabling in each House of Parliament, the fifth Annual Report of the Taxpayers’
Ombudsman. This report provides an overview of the activities and operations of my Office, from
April 1, 2012 to March 31, 2013. It highlights our achievements as we strive to ensure that taxpayers receive
the professional service and fair treatment to which they are entitled from the Canada Revenue Agency.
Yours truly,
J. Paul Dubé, BA, LL.B, J.D.
Taxpayers’ Ombudsman
August 21, 2013
Ms. Fauzia Lalani, P. Eng.
Chair, Canada Revenue Agency Board of Management
555 MacKenzie Avenue, 7th floor
Ottawa, ON K1A 0L5
Dear Madam Chair:
I am pleased to submit the fifth Annual Report of the Taxpayers’ Ombudsman.
This report provides an overview of our activities and operations from April 1, 2012 to March 31, 2013.
I trust that the information contained in this document will assist you in your responsibility of overseeing
the organization and administration of the Canada Revenue Agency.
Yours truly,
J. Paul Dubé, BA, LL.B, J.D.
Taxpayers’ Ombudsman
Message from the Ombudsman
Five years of making a difference for
Canadians
I was appointed Taxpayers’ Ombudsman in 2008 and
I must confess that as I pen this message in 2013, I am
astonished at how quickly the past five years have
gone by. I look back with considerable pride at what
my team and I have accomplished over that period.
Some skepticism was expressed about my position
when it was first created but I believe the impact of
my Office has far exceeded original expectations.
In five very short years my team and I have built a new
organisation from the ground up and established a
respectable track record in bringing about positive
changes at the Canada Revenue Agency (CRA).
In addition to responding to thousands of enquiries,
requests for assistance, and complaints from taxpayers,
we have investigated several of the systemic service
and fairness issues faced by taxpayers in their dealings
with the CRA. Those investigations have resulted in an
Observation Paper, six Special Reports, and 24 recommendations for corrective action. To date, all of my
recommendations to various Ministers of National
Revenue have been accepted and are being implemented
by the CRA. If Canadians are now receiving adequate
written reasons for the decisions of the CRA’s Appeals
Branch, if there is better information more readily
available about the Canada Child Tax Benefit, if taxpayers
are more informed about the tax consequences of the
Tax Free Savings Account, if the CRA is misallocating
fewer taxpayer payments, if students who study abroad
receive a more fair determination of their application
for the Tuition Tax Credit, and if the CRA is reducing
the number of Access to Information and Privacy
Requests received and processing the requests it does
receive more efficiently, those improvements are due
in no small measure to the work of my Office.
Annual Report 2012-2013
iv
The Office of the Taxpayers’ Ombudsman (OTO) is
the last recourse for taxpayer complaints about the
treatment or service they receive from the CRA. We
typically get involved after the CRA’s Service Complaints
process has been exhausted. It is important to remember
that we operate at arm’s length and are not part of the
CRA. We are not concerned only with “service issues”
such as rude behaviour, accessibility to information,
or the timeliness of communications. The Taxpayer Bill
of Rights entitles taxpayers to fair treatment from the
CRA and I fulfill my mandate as Taxpayers’ Ombudsman
by upholding the right to fair treatment. Promoting
taxpayer fairness is, therefore, at the heart of our mission
at the OTO.
work with. We are pioneers in this endeavour and day
in and day out the management and staff of the OTO
are required to be innovative and resourceful as we
blaze new trails. I am grateful for their eagerness to
find solutions time and time again.
I wish to thank the many taxpayers, tax practitioners,
and representative associations who bring matters to
our attention and provide us with valuable knowledge.
I owe a special thanks to the members of my
Consultative Committee who so generously contribute
their time, energy, and insight. The contribution of
external stakeholders is crucial to setting our objectives,
and carrying out our work. I hope those contributions
will continue to increase as more people come to
understand the work we do and appreciate our potential
for even greater positive impact.
The CRA interacts with more Canadians than any
other government agency or department in Canada
and makes thousands of decisions every day that
affect the rights and interests of taxpayers and benefit
recipients. The CRA’s responsibility to administer
Canada’s tax system includes the authority to make
decisions on several aspects of a taxpayer’s tax, benefit,
and employment obligations. With the authority to
make decisions comes the responsibility to make
decisions fairly and transparently. It is, therefore,
through the lens of fairness that we examine every
single taxpayer complaint and systemic issue. Taxpayers
in Canada have a right to fairness from the CRA, and
my team and I will continue to work diligently to
promote and uphold that right.
I also extend my thanks to the many ombuds colleagues
across the country and around the world from whom
I have learned so much. For example, consultations
with the Taxpayer Advocate in the United States and
Australia’s Inspector-General of Taxation have been
especially beneficial. Thanks to visionary leadership,
these well-established offices1 have been quite successful
in promoting fairness and correcting maladministration
within their respective tax administration systems.
Learning their best practices has provided me with
valuable insight and more tools to maximize the effectiveness of my Office.
While my Office was created to improve the CRA’s
accountability, we must be accountable as well. We
produced an Interim Report on our activities within a
year of becoming operational and this is our fifth
Annual Report. The results achieved by my Office are
due largely to the members, both past and present, of
a dedicated team I have been fortunate enough to
1
While the Taxpayers’ Ombudsman, Taxpayers’ Advocate and Inspector-General of Taxation each have distinctive mandates, the three officers
have similar roles. All three are scrutineers of their respective tax authorities charged with assessing how well those authorities are treating
taxpayers, meeting their needs, and respecting their rights.
v
Taxpayers’ Ombudsman
“Fairness, in the context of public servants’
duties and obligations, is much more than
just a fair hearing or a provision of a service.
It is about providing information that is
easily found, accessed and understood. It is
about treating the public with dignity and
respect and providing an open, accountable
and timely service. Last but not least, it is
about providing well-reasoned decisions
to the public about actions taken by public
servants”
Looking forward
As I look forward to the remainder of my mandate
I see many challenges ahead. Taxpayers increasingly
expect speed and convenience in their communications
with government agencies. Realizing that my Office is
no exception, we have responded to those expectations
by launching an On-Line Complaint Form and revising
our policies and procedures to make them more responsive to the needs of stakeholders. We will continue to
seek ways to enhance our service to taxpayers through
the development and measurement of service standards
as well as improve the transparency of our operations
by making our investigative procedures accessible on
our Web site.
– Fiona Crean, Ombudsman for the City of Toronto
Information challenges
Despite the considerable efforts devoted to outreach
over the past five years, we still have more work to do
to increase awareness of my role and understanding
of my mandate. Rights do not do much for those who
do not know about them. It is my observation that
Canadians are still not sufficiently aware of their
rights as taxpayers and we still have more work to do
to raise awareness of, and confidence in, the work of
the OTO. Our outreach efforts are ongoing and our
communications strategy continues to evolve. We are
currently planning to establish a social media presence
and enhance communication with stakeholders
through webinars and other electronic media. Outreach
efforts to inform and educate CRA management and
staff about the role of my Office will also remain a
high priority.
As an ombudsman, my role is a neutral one. I am
neither a taxpayer advocate nor a defender of the
CRA. Yet, despite the fact that my Office operates at
Annual Report 2012-2013
vi
arm’s length from the CRA, many Canadians think –
incorrectly – that we operate as part of the CRA. On
the other hand, the CRA does see us as outsiders but
often assumes – incorrectly – that we are advocating
for complainants. We will continue to educate stakeholders about our role and the potential benefits to
all concerned.
This issue is also relevant to the CRA’s bottom line.
The manner in which tax administrators perform
their duties and exercise their considerable powers
has a significant impact on their ability to collect
revenue effectively. If citizens perceive the actions or
processes of a revenue authority to lack fairness, they
may contest the legitimacy of those actions or
processes, or even opt out of the tax system entirely.
The result is that the revenue authority has to process
more appeals and objections, litigate more disputes,
and allocate more resources to the detection and
deterrence of non-compliance.
Confidence challenges
Two things taxpayers and tax professionals tell us that
they want in their dealings with the CRA, in addition to
fair treatment and professional service, are certainty
and finality. Canadians want to know that if they act
in good faith according to information, advice, or
rulings provided by the CRA, they will not face an
unpleasant surprise in the form of a reassessment or a
change of the CRA’s position later on. We have heard
many anecdotes about such occurrences and other
allegations of unfair treatment by the CRA from
taxpayers or tax professionals who would not file a
formal complaint with our Office. Yet we can only
intervene in an individual case and assess whether
the CRA has met its obligations pursuant to the
Taxpayer Bill of Rights if we have a complaint
to investigate.
Given that Canada’s self-assessment tax system is based
on voluntary compliance, the CRA needs to establish
and maintain legitimacy with every Canadian it serves.
The more the CRA is seen to be transparent, open to
constructive feedback, and accepting of feasible
recommendations for positive change, the more trust
and confidence taxpayers will have in its administration
of the tax system. More trust and confidence will
mean fewer disputes and lower operating costs.
Going forward we will continue to strive to instill a
service culture at the CRA and enhance its accountability to taxpayers, not only because it is what taxpayers
deserve but because that is what is in the best interest
of all stakeholders, including the CRA.
Canadians rely on the CRA for information and services
in order to be able to fulfill their obligations pursuant
to the Income Tax Act. It is imperative that they be able
to receive clear, complete, and accurate information
from the CRA in a timely fashion. It is also imperative
that the CRA’s considerable powers not be used in an
arbitrary manner. For the Taxpayer Bill of Rights to be
relevant and effective, Canadians need to have confidence that its protections are meaningful and take
advantage of them. In other words, the CRA must not
only respect and comply with the Taxpayer Bill of
Rights, it must be seen to do so.
vii
Taxpayers’ Ombudsman
Contents
ABOUT US ........................................................................................................................................................2
COMPLAINT INVESTIGATION PROCEDURES ...............................................................................................5
Case Summaries ...............................................................................................................................................9
SYSTEMIC INVESTIGATIONS ........................................................................................................................11
Special Reports Published ..............................................................................................................................13
Other Investigations – No Recommendations ...............................................................................................16
RECOMMENDATIONS MADE TO DATE ........................................................................................................19
INFORMING CANADIANS.............................................................................................................................21
BEHIND THE SCENES ....................................................................................................................................23
HOW TO CONTACT US ..................................................................................................................................24
1
Taxpayers’ Ombudsman
ABOUT US
The Taxpayers’ Ombudsman is an independent officer
appointed by the Federal Government. The position
was created to support the priorities of stronger
democratic institutions, increased transparency, and
the fair treatment of all Canadians.
What we do
The Taxpayers’ Ombudsman ensures that the CRA is
fair and transparent in its administrative processes.
All stakeholders – taxpayers, tax professionals, and
the CRA – benefit from the work of the Office of
the Taxpayers’ Ombudsman (OTO). We work with
taxpayers, their representatives, and the CRA to resolve
not only individual complaints, but problems that are
systemic in nature. We help taxpayers get the attention
their problems deserve and our intervention often
leads to positive outcomes they could not achieve on
their own. We also often de-escalate tensions between
taxpayers and the CRA, affirm the work of CRA
employees, and propose recommendations to improve
the CRA’s policies and procedures.
Our vision
In every interaction, the Canada Revenue Agency (CRA)
treats taxpayers fairly and serves them professionally.
Our mission
The Taxpayers’ Ombudsman is committed to ensuring
transparency, accountability, and the fair treatment
of taxpayers by the CRA.
Our values
The OTO is an office of last resort. This means that
the Ombudsman will normally only review a request
if the requester has exhausted the CRA’s internal
redress mechanisms. Exceptionally, the Ombudsman
may undertake a complaint investigation before the
other redress mechanisms have been exhausted if the
Ombudsman determines that there are compelling
circumstances, such as:
We believe in interactions based on independence,
impartiality, fairness, and confidentiality that encourage
people to adapt and cooperate while working respectfully towards positive outcomes.
a) the complaint raises systemic issues;
b) exhausting the redress mechanisms will cause
undue hardship to the taxpayer; or
c) exhausting the redress mechanisms is unlikely to
produce a result within a period of time that the
Ombudsman considers reasonable.
Annual Report 2012-2013
2
How we do it
The activities of the OTO are carried out by three
units working in unison: Operations (Intake, Complaint
Investigations, and Systemic Investigations),
Communications, and Corporate Services. The office
employed a staff of 26 Full-Time Equivalents (FTE)
during this reporting period.
Organizational Structure of the Office of the Taxpayers’ Ombudsman
Taxpayers’ Ombudsman
Corporate Services
5 FTE
Operations
Director
Systemic Investigations
6 FTE
Complaint Investigations
Intake
4 FTE
Communications
3 FTE
Complaints
4 FTE
3
Taxpayers’ Ombudsman
Operations Unit
Communications Unit
The Operations Unit is divided into three teams.
The Intake Team is the first point of contact for
taxpayers. It assists taxpayers by:
The Communications Unit plans and coordinates
our efforts to inform stakeholders about their rights
as well as our role and activities. This unit:
• informing them of their rights and educating
them about the complaints process;
• provides strategic advice on public affairs and
stakeholder engagement;
• answering their questions and enquiries, and
providing guidance; and
• responds to media inquiries;
• plans and coordinates communications and
outreach activities;
• helping them access redress mechanisms within the
CRA, or other government departments if necessary.
• manages the Taxpayers’ Ombudsman Web site
and develops a social media presence; and
The Complaint Investigations Team works to resolve
taxpayer complaints about service or fairness. It does
that by:
• produces a newsletter, articles for publication,
and other communication products.
• getting both sides of the story and conducting
independent and impartial investigations of
complaints received;
Corporate Services Unit
The Corporate Services Unit ensures organizational
effectiveness and accountability. This unit:
• evaluating the CRA’s service to, and treatment of,
the complainant based on the evidence;
• provides advice and integrated organizational
services;
• requesting that the CRA take specific action to
rectify the taxpayer’s issue, when appropriate;
and
• is responsible for fulfilling legislative requirements,
such as requests pursuant to the Access to
Information Act and the Privacy Act;
• advising the parties of the outcome.
• conducts corporate planning, quality assurance,
financial management, human resources management, and information management;
The Systemic Investigations Team examines issues
that may adversely affect multiple taxpayers. This team:
• identifies systemic service or fairness issues;
• coordinates contracting and information technology
services; and
• gathers information from complainants, the CRA,
and other stakeholders;
• develops and updates corporate documents.
• conducts research and analysis of the issues; and
• compiles findings and prepares recommendations.
Annual Report 2012-2013
4
COMPLAINT INVESTIGATION PROCEDURES
Many taxpayers come to our Office seeking a fair
and impartial review of a complaint related to the
treatment or service they have received from the
Canada Revenue Agency (CRA). We strive to respond
to all enquiries within two business days.
Our process works like this:
Receive complaint
Send acknowledgement letter
Assess complaint
Actionable
Not actionable
Refer to the CRA or to appropriate
government departments
Conduct Investigation
Send final
report to
complainant
5
Send final
report and
recommendations
to the CRA
Taxpayers’ Ombudsman
We receive complaints by mail, by fax, in person, and,
since March 2013, through an electronic On-Line
Complaint Form. We assess the complaints to determine
if they are actionable by our Office. Some complaints
do not relate to matters of fairness or service and are,
therefore, not actionable. We refer these complainants
to the department or agency that is best suited to
helping them.
Summary of Files
2012-2013
Files Opened
Files carried over from
previous fiscal
110
107
990
835
41
35
1141
977
Non-Mandate (closed after
preliminary review)
358
250
Early Resolution
525
427
191
163
1074
840
Files opened
Files re-opened
Total
Sometimes complaints need immediate attention, such
as in cases of financial hardship. In these instances,
we send an Urgent Request for Action to the CRA,
which the CRA usually addresses within 48 hours.
2011-2012
Files Closed
When we receive a complaint that is admissible, we
assign it to our Complaint Investigations Team for
review. Once we have a complainant’s written consent
to access their file at the CRA, we conduct a thorough
investigation, soliciting input from the complainant
and the CRA to obtain the widest and most accurate
understanding of the complaint possible. Our investigators will contact the complainant to inform them
of our processes and to provide them with regular
updates.2 Once an investigation is completed, we will
communicate our findings to the taxpayer and the
CRA. If the complaint is found to have merit, we can
propose constructive action to the CRA through
administrative recommendations.
Investigations completed
Total
Tracking Issues
We track our workload not only by the number of
complaints, but also by the number of issues raised
by complainants. Tracking the issues enhances our
understanding of the problems faced by taxpayers
and enables us to identify trends and provide constructive feedback to the Canada Revenue Agency (CRA).
Issues per File
File Complexity
Number of files with 1-3 issues
164
Number of files with 4-5 issues
15
Number of files with 6+ issues
12
Average number of issues per file
2
Our service standard for updates is every 15 days.
Annual Report 2012-2013
6
Number of files
2.2
We also identify which service rights are relevant to a
complaint. The service rights relevant to complaints in
this reporting period are quantified in the chart below.
Issues by Service Right
Investigations
Taxpayer Right
With Merit
Without Merit
Discontinued
Total
To be treated professionally and courteously
29
60
14
103
To be treated fairly
59
52
9
120
To complete, accurate and clear information
33
74
9
116
To timely information
5
20
0
25
To lodge a service complaint and to be provided with an
explanation of the findings
5
4
0
9
To have the costs of compliance taken into account when
administering tax legislation
0
2
2
4
To expect CRA to be accountable
9
21
3
33
To be represented by the person of your choice
0
1
0
1
140
234
37
411
Total
7
Taxpayers’ Ombudsman
The Office of the Taxpayers’ Ombudsman receives
enquiries, complaints, and requests for assistance from
taxpayers all across Canada. The chart below demonstrates the number of files received by our Office and
from which province or territory they originated.
2012-2013 Caseload: 918 within Canada, 21 outside Canada, and 51 addresses undisclosed.
Annual Report 2012-2013
8
The following are case summaries that illustrate
the scope of our work on complaint files
Case Summaries
Upholding a taxpayer’s right to complete,
accurate, clear and timely information
– from consultation, referrals to the CRA,
to full investigations.
Mr. X contacted our office, frustrated by his inability
to get clear and accurate information about his tax
liabilities from the CRA. He claimed that he received
conflicting information about how to claim lump
sum Canada Pension Plan payments. Mr. X’s 2009
personal income tax had been reassessed four times
and he claimed that, despite several requests, he was
unable to obtain clear information from the CRA as
to how the amounts on the reassessments had been
determined, or how much money he owed as a result.
Mr. X lodged a complaint with the CRA – Service
Complaints program but was not satisfied with the
outcome. He felt that at the end of that process he
had still not been provided with sufficient information
from the CRA. When Mr. X came to us, we facilitated
the provision of information from the CRA. In a
Request For Action we recommended that the CRA
contact the taxpayer to provide him with answers to
his questions, including the current outstanding
balance on his tax account. We also suggested that
the CRA provide Mr. X with information on the CRA’s
Taxpayer Relief program under which he could request
a cancellation of penalties and interest. As a result of
our intervention, Mr. X was promptly provided with
the information he needed to resolve his tax matters
and to apply for relief of penalties and interest.
Financial hardship resolved
Mr. Y contacted our Office claiming financial hardship
and looking for help. In August 2012, he had submitted
amended tax returns to the CRA for the previous six
years and was expecting a substantial refund as a result.
By November 2012, he had not received his refund.
9
Taxpayers’ Ombudsman
When he contacted the CRA to find out why, he was
told that he needed to resubmit his documents and
that it would take another six to eight weeks to process
them. We sent the CRA an Urgent Request for Action,
asking that Mr. Y’s situation be addressed as soon as
possible. As a result of our intervention, Mr. Y’s reassessment requests were expedited and the refund was
issued within 2 weeks.
separate occasions to various CRA departments but
did not receive a response. Upon receiving Mr. O’s
complaint we began looking into the current status of
his applications. Our investigation revealed that the
information he had sent to the CRA was sufficient for
him to claim his daughter as an eligible dependent,
but insufficient to claim the CCTB. As a result, we sent
the CRA a Request for Action asking that it contact
Mr. O promptly to provide him with information and
assistance to help him substantiate his CCTB claim.
As a result of our intervention, Mr. O was able to submit
the required documentation and receive the benefit
to which he and his daughter were entitled.
Misallocation of payments corrected
After Ms. J’s business was audited by the CRA she filed
an appeal because she felt that the CRA’s audit results
were incorrect. Consequently, a refund was issued to
Ms. J. However, she believed that the CRA had made
an error in adjusting the arrears interest and thought
that a substantial refund was still owed. Once Ms. J
contacted our Office for assistance, we reviewed the
information she had submitted and began to investigate
how payments had been allocated to Ms. J’s account.
In the course of our investigation, the CRA became
aware of a payment misallocation and promptly corrected it. The CRA subsequently issued the additional
refund Ms. J felt she was owed.
Refund issued in a timely manner
Mr. E contacted our Office claiming he was experiencing
financial hardship. Mr. E also claimed that he was
owed a refund from the CRA which he said was
needed to be able to prevent the bankruptcy of his
business. We sent an Urgent Request for Action to the
CRA explaining the issue and the urgency. Within a
month, the CRA had completed the reassessments
and a substantial refund was issued to Mr. E, which
saved his business from bankruptcy.
Eligibility for benefits established
Mr. O took custody of his daughter when he separated
from his wife in 2008. He filed his 2008 and 2009
income tax returns and claimed his daughter as an
eligible dependent. The CRA requested that he provide
documents to support this claim, as well as to support
his claim for the Canada Child Tax Benefit (CCTB).
Mr. O sent in the requested information on three
Annual Report 2012-2013
10
SYSTEMIC INVESTIGATIONS
In addition to investigating complaints from individual
taxpayers, the Taxpayers’ Ombudsman is mandated
to identify systemic and emerging service and fairness
issues that have the potential to adversely affect
taxpayers. The systemic investigation process includes
the research phase, the analysis phase and the reporting
phase. Should the research and analysis phase conclude
that the CRA could do more to comply with the Taxpayer
Bill of Rights, the Ombudsman will submit a Special
Report to the Minister of National Revenue with
recommendations for corrective action.
Procedures
The objective is to identify and help correct service
and fairness problems as quickly as possible.
The Taxpayers’ Ombudsman contributes to improvements in CRA accountability and service by providing
independent advice in three ways:
• Systemic recommendations to the Minister of
National Revenue
• Administrative recommendations to the CRA
• Informal feedback through day-to-day interactions
with the CRA
11
Taxpayers’ Ombudsman
OTO Systemic Investigation Process Map
ISSUE
RESEARCH
ANALYSIS
Complaints
(Individuals and
businesses)
Conduct Preliminary
Research
Conduct Internal &
External Research
Prepare Preliminary
Research Report
Create SIR and send
to OLO for response
Write Annotated
Draft Report
Meeting as required
with OLO/CRA
Write Observation
Paper (if required)
Potential
Systemic Issue
Environmental and
Media Scanning
Minister’s
Request
REPORTING
Recommendations YES
Write Annotated
Draft Report
NO
Investigation?
NO
Case Closed
YES
Assign issue for
investigation
END
Conduct CRA Focus
Groups and/or
Stakeholder
Consultations
Develop Preliminary
Conclusion
OTO = Office of the Taxpayers’ Ombudsman
CRA = Canada Revenue Agency
OLO = Ombudsman Liaison Office
SIR = Systemic Information Request
END
Identify any missing
information or additional research
required
Write Preliminary
Report
Send Final
Report/Observation
Paper to Minister
(Ombudsman may or
may not publish after
60 days)
Send copy to CRA
and request response
(30 days)
Monitor
recommendations
and further related
complaints
END
Annual Report 2012-2013
12
Within months of commencing our investigation,
the CRA began to take steps to address the problem
by clarifying and re-enforcing its procedures to
ensure consistent application by its employees.
Special Reports Published
During the 2012-2013 fiscal year, the Taxpayers’
Ombudsman released three Special Reports and made
15 recommendations to the Minister of National
Revenue. These reports are summarized below. The
complete reports are available on the Taxpayers’
Ombudsman Web site or by contacting our Office.
The Ombudsman recommended that the CRA continue
to ensure that the assessment of claims for the tuition
tax credit be based on the provisions of the Income
Tax Act and not solely on internal practices. The
Ombudsman also recommended that the CRA do more
to inform Canadians about the availability of tuition
tax credits for expenses incurred while attending
educational institutions outside of Canada, as well as
the eligibility criteria. These recommendations were
accepted by the Minister of National Revenue and are
being implemented by the CRA.
To date, various Ministers of National Revenue
have accepted all the recommendations made by the
Taxpayers’ Ombudsman and the Canada Revenue
Agency (CRA) is implementing them.
Earning Credits
Students who attend postsecondary educational institutions in Canada are eligible to
apply for a non-refundable tax
credit for tuition fees and
related expenses. The tax credit
for these expenses, which is
administered by the CRA, reduces
the amount of income tax the
student may have to pay. This tuition tax credit is also
available to students who attend certain educational
institutions outside Canada, provided the institution
meets conditions set out in the Income Tax Act.
Acting on ATIP
We received complaints from
taxpayers facing difficulties in
obtaining information from
the CRA through requests
made pursuant to the Access to
Information Act and the Privacy
Act. These are commonly referred
to as Access to Information and
Privacy (ATIP) requests. Complaints
about the CRA’s service with respect to ATIP requests
included not responding promptly, not providing
enough information about how to file ATIP requests,
not explaining the reasons for delays in providing the
requested information, and requiring taxpayers to
make requests pursuant to the Access to Information
Act or Privacy Act (referred to as ‘formal’ requests which
are processed by the CRA’s ATIP Directorate) rather than
allowing taxpayers to request the information ‘informally’
by simply asking a CRA employee to provide it.
Our Office received complaints from students attending
educational institutions outside Canada who felt, as
a result of being denied the tuition tax credit, that
they were being treated unfairly by the CRA. Our
investigation revealed that the CRA’s assessment of
their claims had not been based on the criteria set out
in the Income Tax Act, but solely on whether or not
the educational institution they attended was on a
pre-approved list.
13
Taxpayers’ Ombudsman
Federal government departments and agencies, like
the CRA, are bound by the law as set out in these Acts,
which specify time limits within which they must
respond to a request for information. The Access to
Information Act sets a 30-day limit with the possibility
of an extension for a reasonable period of time if, for
example, the request encompasses a large number of
records or the institution must consult with another
department, agency or third party. The Privacy Act sets
a 30-day limit with the possibility of an additional
30-day extension to respond to the request. Under
both the Access to Information Act and the Privacy Act,
the reasons for applying the extension must be
communicated to the requestor.
The Ombudsman recommended improvements aimed
at making it easier for taxpayers to request and obtain
information from the CRA. The Ombudsman recommended that the CRA ensure that efficient processes
and adequate resources are put in place within the ATIP
Directorate to address the processing of information
requests and reduce the backlog in a timely manner.
The Ombudsman also recommended that the CRA
develop clear policies and procedures that promote
the use of informal disclosure and provide enhanced
training to its personnel to assist them in handling
these types of requests. Additionally, the Ombudsman
recommended that the CRA provide the public with
clear information on how to make informal requests
for information and advise the public when extended
requests will not be met. Finally, the Ombudsman
recommended that the CRA continue and enhance
the public disclosure of completed ATIP requests, and
update its communication products in order to promote
the availability of this service. These recommendations
were accepted by the Minister of National Revenue
and are being implemented by the CRA.
Whether or not the CRA is meeting the legislated
requirements for timely access falls within the purview
of the Federal Information and Privacy Commissioners.
However, by failing to provide complete, accurate,
and timely information to taxpayers making ATIP
requests, the CRA is neglecting to comply with the
Taxpayer Bill of Rights and this matter falls within the
purview of our Office.
Our investigation into these complaints revealed
that, in several instances, even though the CRA had
invoked an extended deadline, it failed to provide
a completed response to the request before the
extended deadline had been reached. Some complainants were left not knowing when they could expect to
receive the information they had requested or
whether anyone was even working on their request.
Getting it Right
Each year, the CRA processes
approximately 34 million payments from Canadian taxpayers.
Many taxpayers have multiple
accounts with the CRA. For
example, they may have personal
income tax accounts, corporate
accounts, and goods and services
tax/ harmonized sales tax (GST/
HST) accounts. Our office received complaints from
taxpayers alleging that the payments they made to
their accounts were “misallocated.” In other words,
the payments were not applied to the intended
These delays can have a negative impact on taxpayers
wanting to know the reasons for the CRA’s decision
on an objection or appeal prior to making a decision
to file an appeal with the Tax Court of Canada.
Without the proper information, taxpayers are left
not knowing whether or not appealing to the Court
is advisable.
Annual Report 2012-2013
14
account. Some said that as a result of these errors they
had been assessed interest and penalty charges, while
others informed us they were subjected to payment
demands from CRA collections officers. Many of
these taxpayers complained about the time and effort
they had to spend to correct such errors.
“This is a very specific issue that has frustrated
small-business owners and the ombudsman
was very clearly in a good position to get to the
bottom of it and find out what was happening
and make recommendations that will work.”
Our investigation revealed that payment misallocations
occur due to errors, both by the CRA and taxpayers.
We learned that the CRA has quality assurance measures
in place to detect and correct its own internal processing errors. However, if a misallocation is the result
of an error or omission by a taxpayer, the controls to
detect the problem are less stringent. While the CRA
has implemented certain electronic payment options
intended to minimize these errors, payments are still
being misallocated and generating taxpayer complaints.
Laura Jones – Canadian Federation of
Independent Business
In this report, the Ombudsman recommended that
the CRA review its standards and procedures for
processing payments to ensure that CRA employees
are afforded sufficient time to accurately and thoroughly
perform their duties. The Ombudsman also recommended that the CRA determine the optimal remittance
batch limit for the most efficient detection of processing
errors. Additionally, the Ombudsman recommended
that the CRA inform and educate taxpayers on how to
avoid making remittance errors, as well as how to
have them corrected when they do occur.
15
Taxpayers’ Ombudsman
During the initial stages of our investigation, we
shared our observations on these inconsistencies
with the CRA. The CRA proceeded to change both its
internal procedures and external information in
order to ensure consistency in how the effective dates
for GST/HST voluntary registration are determined
and applied, regardless of the method of registration.
We found that these actions adequately addressed
the issues that were raised by complainants and the
investigation was closed.
Other Investigations
Not all of our systemic investigations culminate in a
Special Report. Sometimes we determine that further
action by the CRA is not required or that recommendations are not warranted. Although we may not issue
a Special Report in such circumstances, the Ombudsman
will share his findings with the Minister of National
Revenue and the CRA, provide a summary in the
Annual Report, or publish an Observation Paper on
the subject. Included in this Annual Report are details
from three investigations, two of which were concluded
in 2012-2013, and one that is still ongoing.
Delays in the International Tax Services Office
We received a number of complaints from taxpayers
and their representatives concerning the inaccessibility
of the International Tax Services Office (ITSO) through
its phone lines and significant delays in its correspondence to taxpayers. Complainants told us they either
received a busy signal when calling the ITSO or had to
wait a long time before reaching an agent. Taxpayers
had also complained about the amount of time it took
the ITSO to respond to correspondence. Complainants
told us that multiple attempts were required before
contact could be made, and in some cases their faxes
and letters were never acknowledged or responded to.
Effective Registration Dates for GST/HST
(Voluntary Registrants)
We received complaints alleging that the CRA was
inconsistent in its determination of the “effective
registration dates” for GST/HST voluntary registrants
and that this was unfair. The complaint was that
taxpayers could not get a consistent response from
the CRA about how it would determine the effective
date of registration for GST/HST.
Our investigation found that, depending on the
method of registration, there were indeed inconsistencies in how the CRA applied the effective GST/HST
registration date. If the application was made over the
phone or in person, the CRA would use the day of the
call (or visit) as the effective date. If the application
was mailed, the CRA would use the date post-marked
on it by postal authorities. If the application was
received by fax, the date stamped on the fax by the
fax machine would be used. If the application was
hand-delivered or sent by courier, the date on the
CRA’s receipt stamp would be used.
Annual Report 2012-2013
During the course of our investigation, the CRA began
to make significant changes at the ITSO, both with
respect to phone lines and the correspondence unit.
The responsibility for managing the phone lines was
transferred to the national call centres, new procedures
for acknowledgement of certain letters were implemented, and a new system for tracking correspondence
was developed.
Following the implementation of the changes at the
ITSO, complaints about these issues subsided. We
determined that the actions taken by the CRA appeared
to have adequately addressed the issues raised in the
complaints and the investigation was closed.
16
As a result, the Ombudsman issued an interim report
to the Minister, recommending that the CRA develop a
national electronic inventory of all its training videos.
This recommendation was accepted by the Minister,
and in December 2012, the CRA implemented
mandatory registration of training videos in its national
Directory of Learning Products inventory.
CRA Training Videos and Respecting the
Taxpayer Bill of Rights
The Minister of National Revenue requested the
Taxpayers’ Ombudsman to review all training videos
in use by the CRA to ensure that they respected the
Taxpayer Bill of Rights. Additionally, the Minister
requested that the Ombudsman review all future
training videos to ensure that they are consistent
with the Taxpayer Bill of Rights.
We are continuing our research into the CRA’s policies
and procedures for making and procuring training
videos. We expect to release a full report on our investigation during the 2013-2014 fiscal year.
Early in our investigation, we found that the CRA did
not have a central inventory of all the training videos
in its possession. In fact, extensive research was
required in order to determine what videos were
currently in the CRA’s possession and where they
were located. Therefore, it became obvious that in order
to be able to fulfill the Minister’s requests, an accurate
inventory of training videos had to be established.
17
Taxpayers’ Ombudsman
RECOMMENDATIONS MADE TO DATE
Ombudsman Special Report
Recommendations
Made by the Ombudsman
Accepted by the Minister
The Right to Know – Examination of the sufficiency of information
in Decision Letters from the Appeals Branch of the Canada
Revenue Agency
– published in November 2010
1
1
Proving Your Status – Establishing eligibility for the Canada Child
Tax Benefit
– published in December 2010
5
5
Knowing the Rules – Confusion about the rules governing the
Tax-Free Savings Account
– published in August 2011
3
3
Getting it Right – Investigation of service and fairness issues arising
from the misallocation of payments by the Canada Revenue Agency
– published in September 2012
3
3
Earning Credits – Service and fairness issues in the assessment of
tuition tax credits for expenses incurred attending educational
institutions outside Canada
– published in May 2012
5
5
Acting on ATIP – Service issues in the Canada Revenue Agency’s
Access to Information and Privacy processes.
– published in June 2012
7
7
19
Taxpayers’ Ombudsman
Presentation at Tax Practitioner Seminar
Annual Report 2012-2013
20
INFORMING CANADIANS
held in New York City. This conference, sponsored by
the American Bar Association, was a valuable opportunity for the Ombudsman to learn about trends in
tax enforcement and issues that could potentially
have an impact on Canadians and their service rights.
It also provided the chance to discuss best practices
with other ombuds whose role is to promote fairness
and taxpayer rights.
Outreach
The Taxpayers’ Ombudsman’s commitment to informing Canadian taxpayers of their rights and explaining
his role is as strong today as it was when he was first
appointed five years ago.
The Ombudsman continued his outreach efforts
through speaking engagements to tax professionals
and national stakeholder groups. The feedback received
from participants about the service they received from
the CRA provided the Ombudsman valuable insight
into service and fairness issues. Some of these issues
lead to systemic investigations.
Employees of the Office of the Taxpayers’ Ombudsman
also participated in outreach activities. For the second
year in a row, employees from our Office participated in
the Willowdale Community Fair, “Help is Here”. This
event was hosted by the City of Toronto and co-hosted
by Member of Parliament, Chungsen Leung. The fair
participants, including local organizations and provincial and federal agencies, offered visitors the opportunity
to ask questions and gain useful information about
available services.
In addition to speaking to many accountants, tax
preparers, and tax lawyers at various information
sessions, the Ombudsman also joined international
counterparts in a panel discussion about taxpayer
rights at the International Tax Enforcement Conference
Outreach and Speaking Engagements
Date
Event
Location
Sept. 11, 2012
Tax Practitioner Seminar sponsored by PricewaterhouseCoopers LLP
Toronto
Sept. 13, 2012
National Conference of the Canadian Institute of Chartered Accountants
Mississauga
Nov. 9, 2012
American Bar Association Conference on International Tax Enforcement
New York
Nov. 20, 2012
Tax Practitioner Seminar sponsored by Torkin Manes Law Firm
Toronto
Feb. 13, 2013
Tax Practitioner Seminar & visit to Barrie Tax Services Office
Barrie
Mar. 2, 2013
Service Information Fair
Willowdale
Mar. 21, 2013
Tax Practitioner Seminar sponsored by the Tax Executives Institute – Toronto Chapter
Toronto
21
Taxpayers’ Ombudsman
As part of our outreach, we also initiated a new venture
aimed at raising awareness through our participation
with the online publication Protégez-vous. Our Office
submitted a number of articles for publication, with
topics ranging from tax schemes to the Tax Free Savings
Account. Each article also provided readers with information about our Office’s services and links to helpful
tools from our Web site. The articles were viewed by 92%
of the Web site’s approximate 162,000 subscribers.
Our media coverage is generally positive and provides
the Ombudsman a platform to reach Canadians and
illustrate how our Office is making a difference for them.
Web
As the Government of Canada continues to look
for new means to deliver programs and services in a
digital-driven environment, the Web sites of federal
departments and agencies are becoming increasingly
popular and effective resources for information.
Media
In 2012-2013, we launched our electronic complaint
form, allowing taxpayers to submit the details of their
service-related complaint through a secure online
application as an alternative to the traditional mail,
telephone, and fax methods. In our fifth fiscal year, our
Web site received over 135,000 visits.
During the 2012-2013 year, the Office of the Taxpayers’
Ombudsman published the Earning Credits, Acting on
ATIP, and Getting It Right Special Reports and posted
the Digest of Taxpayer Service Rights online. The release
of these documents were widely covered by the
English and French national media alike, and reached
over two million individuals through radio and
television broadcasts.
Public Announcements of Special Reports
Date
Special Report
April 23, 2012
Digest of Taxpayer Service Rights * potential reach – approximately 400,000
May 7, 2012
Special Report: Earning Credits * potential reach – approximately 30,000
June 6, 2012
Special Report – Acting on ATIP * potential reach – approximately 300,000
Sept. 13, 2012
Special Report: Getting it Right * potential reach – approximately 1,000,000
Annual Report 2012-2013
22
BEHIND THE SCENES
Improving Business Operations
Legislative Obligations
During the 2012-2013 fiscal year, we conducted a preliminary quality assurance project of our investigative unit
to determine how well we were meeting our business
standards. On the whole we confirmed that our officers
are providing optimal service to taxpayers and identified
a few administrative best practices to improve our
overall performance.
The Office of the Taxpayers’ Ombudsman is subject
to a number of legislative obligations including the
Official Languages Act, the Access to information Act,
the Privacy Act, and the Canada Labour Code. On an
ongoing basis, our Office ensures that we are complying
with all legislative requirements, and provides awareness sessions to our staff on their roles in ensuring
consistent compliance.
We also continued to enhance our case management
system to deliver better reports and better meet the
operational needs of our officers.
Financial Resources
Improving Collaboration
Expenditures
The Government of Canada has shown a commitment
to providing fair treatment to those who access
government programs and services by instituting
Ombudsmen and their related offices to ensure
fairness and transparency in the administration of
services. While the mandates of each ombudsman
office vary according to the department or agency they
oversee, there are sufficient commonalities to warrant a
regular exchange of information and ideas on best practices, challenges, and potential directions for the future.
1,872
Training and Education
18
60
Professional Services
47
12
Information Technology
Services
35
27
Travel
41
21
Office Equipment
19
9
Printing and Publishing
20
19
Telecommunications
25
–
Office Expenses
22
19
2,061
2,039
Total Annual Operating
Expenses
23
2012-2013
($000)
1,834
Salaries
A number of our organizations have been and are in
contact with one another in the sharing of best practices,
knowledge, and ombuds tools. These interactions have
proven to be beneficial. As a result, our Office took on a
leading role in building an Ombudsman Community
of Practice and an online wiki website to help facilitate
the inter-departmental sharing of best practices.
2011-2012
($000)
Taxpayers’ Ombudsman
HOW TO CONTACT US
You can contact the Office of the Taxpayers’
Ombudsman by:
• calling us toll-free at 1-866-586-3839
within Canada and the United States.
If you are outside of Canada and the United
States, please call collect at 613-946-2310.
Our office hours are 8:15 a.m. to 4:30 p.m.
EST, Monday to Friday (except holidays)
• visiting our Web site at www.oto-boc.gc.ca
and completing our complaint form
describing your situation, submitting it
online, or mailing or faxing it with any
supporting documents to:
Office of the Taxpayers’ Ombudsman
50 O’Connor Street, Suite 724
Ottawa ON K1P 6L2
Canada
Fax: 613-941-6319
Toll-free fax: 1-866-586-3855
• making an appointment for an in-person
meeting by calling us during our regular
office hours
Annual Report 2012-2013
24